OBAMA: The news this past week, including this morning’s news about Citigroup, has made it even more clear that we are facing an economic crisis of historic proportions.
Our financial markets are under stress. New home purchases in October were the lowest in half-a-century. Recently, more than 500,000 jobless claims were filed, the highest in 18 years.
And if we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year.
While we can’t underestimate the challenges that we face, we also can’t underestimate our capacity to overcome them, to summon that spirit of determination and optimism that has always defined us, and to move forward in a new direction to create new jobs, reform our financial system, and fuel long-term economic growth.
We know this won’t be easy, and it won’t happen overnight. We’ll need to bring together the best minds in America to guide us, and that is what I’ve sought to do in assembling my economic team.
I’ve sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold, new ideas, and most of all who share my fundamental belief that we cannot have a thriving Wall Street without a thriving Main Street, that in this country we rise or fall as one nation, as one people.
Today, Vice President-elect Biden and I are pleased to announce the nomination of four individuals who meet these criteria to lead our economic team: Timothy Geithner as secretary of treasury; Lawrence Summers, as the director of our National Economic Council; Christina Romer, as chair of the Council of Economic Advisers; and Melody Barnes, as director of domestic — the Domestic Policy Council.
Having served in senior roles at Treasury, the IMF, and the New York Fed, Tim Geithner offers not just extensive experience shaping economic policy and managing financial markets; he also has an unparalleled understanding of our current economic crisis in all of its depth, complexity and urgency.
Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today’s markets and a clear vision of the steps we must take to revive them.
The reality is that the economic crisis we face is no longer just an American crisis; it’s a global crisis. And we will need to reach out to countries around the world to craft a global response. Tim’s extensive international experience makes him uniquely suited to do that work.
Growing up partly in Africa and having lived and worked throughout Asia, having served as undersecretary of the treasury for international affairs, one of the many roles in the international arena, and having studied both Chinese and Japanese, Tim understands the language of today’s international markets in more ways than one.
OBAMA: Tim served with distinction under both Democrats and Republicans and has a long history of working comfortably and as an honest broker on both sides of the aisle.
With stellar performances and outstanding results at every stage of his career, Tim has earned the confidence and respect of business, financial and community leaders, members of Congress, and political leaders around the world. And I know he will do so once again as America’s next treasury secretary, the chief economic spokesman for my administration.
Now, like Tim, Larry Summers also brings a singular combination of skill, intellect and experience to the role he will play in our administration. As undersecretary, deputy secretary, and then secretary of the treasury, Larry helped guide us through several major international financial crises and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes, and more than 20 million new jobs.
He also championed a range of measures, from tax credits to enhanced lending programs to consumer financial protections, that greatly benefited middle-income families.
As a thought leader, Larry has urged us to confront the problems of income inequality and the middle-class squeeze, consistently arguing that the key to a strong economy is a strong, vibrant, growing middle class. This idea is at the core of my own economic philosophy and will be the foundation of all of my economic policies.
And as one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges.
With respect to both our current financial crisis and other pressing economic issues of our time, his thinking, writing and speaking have set the terms of the debate.
I’m glad he will be by my side, playing the critical role of coordinating my administration’s economic policy in the White House, and I will rely heavily on his advice as we navigate the uncharted waters of this economic crisis.
As one of the most expert people in America on economic crises and how to solve them, my next nominee, Christina Romer, will bring a critically needed perspective to her work as chair of my Council of Economic Advisors.
Christina is both a leading — both a leading macroeconomist and a leading economic historian, perhaps best known for her work on America’s recovery from the Great Depression and the robust economic expansion that followed.
Since 2003, she’s been co-director of the National Bureau of Economic Research Monetary Economics program. She’s also a member of the bureau’s Business Cycle Dating Committee, the body charged with officially determining whether a recession has started and ended, experience which will serve her well as she advises me on our current economic challenges.
Christina has done groundbreaking research on many of the topics our administration will confront, from tax policy to fighting recessions. And her clear-eyed, independent analyses have received praise from both conservative and liberal thinkers alike. I look forward to her wise counsel in the White House.
Finally, we know that rebuilding our economy will require action on a great variety of fronts: from education and health care to energy and Social Security. Without sound policies in these areas, we can neither enjoy sustained economic growth nor realize our full potential as a people.
So I am extraordinarily pleased that Melody Barnes, one of the most respected policy experts in America, will serve as my director of domestic — the Domestic Policy Council, and that she will be working hand in hand with my economic policy team to chart a course to economic recovery.
An integral part of that course will be health care reform, and she will work closely with my secretary of health and human services on that issue.
As executive vice president for policy at the center of — at the Center for American Progress, Melody directed a network of policy experts dedicated to finding solutions for struggling middle-class families.
She also served as chief counsel to the great Senator Ted Kennedy on the Senate Judiciary Committee, working on issues ranging from crime to immigration to bankruptcy, and fighting tirelessly to protect civil rights, women’s rights, and religious freedom.
Melody’s brilliant legal mind and her long experience working to secure the liberties on which this nation was founded, as well as to secure the opportunities for those who’ve been left behind, make her a perfect fit for DPC director.
OBAMA: I am grateful that Tim, Larry, Christina and Melody have accepted my nomination, and I am looking forward to working closely with them in the months ahead. And that work starts today, because the truth is, we do not have a minute to waste.
Right now, our economy is trapped in a vicious cycle: the turmoil on Wall Street means a new round of belt-tightening for families and businesses on Main Street, and as folks produce less and consume less, that just deepens the problems in our financial markets.
These extraordinary stresses on our financial system require extraordinary policy responses. And my administration will honor the public commitments made by the current administration to address this crisis.
Further, beyond any immediate actions we may take, we need a recovery plan for both Wall Street and Main Street, a plan that stabilizes our financial system and gets credit flowing again, while at the same time addressing our growing foreclosure crisis, helping our struggling auto industry, and creating and saving 2.5 million jobs, jobs rebuilding our infrastructure, our roads, our bridges, modernizing our schools, and creating the clean energy infrastructure of the 21st century.
Because at this moment, we need to restore both confidence in the markets and restore confidence of middle-class families, who find themselves working harder, earning less, and falling further and further behind.
I’ve asked my economic team to develop recommendations for this plan and to consult with Congress, the current administration, and the Federal Reserve on immediate economic developments over the next two months.
I’ve requested that they brief me on these matters on a daily basis. And in the coming weeks, I will provide the American people and the incoming Congress with an overview of their initial recommendations.
It is my hope that the new Congress will begin work on an aggressive economic recovery plan when they convene in early January so that our administration can hit the ground running.
With our economy in distress, we cannot hesitate and we cannot delay. Our families can’t afford to keep on waiting and hoping for a solution. They can’t afford to watch another month of unpaid bills pile up, another semester of tuition slip out of reach, another month where, instead of saving for retirement, they’re dipping into their savings just to get by.
And I want to repeat: This will not be easy. There are no shortcuts or quick fixes to this crisis, which has been many years in the making, and the economy is likely to get worse before it gets better. Full recovery will not happen immediately.
And to make the investments we need, we’ll have to scour our federal budget, line by line, and make meaningful cuts and sacrifices, as well, something I’ll be discussing further tomorrow.
Despite all of this, I am hopeful about the future. I have full confidence in the wisdom and ingenuity of my economic team and in the hard work, courage, and sacrifice of the American people.
And most of all, I believe deeply in the resilience and the spirit of this nation. I know we can work our way out of this crisis because we’ve done it before. And I know we will succeed once again if we put aside partisanship and politics and work together. That’s exactly what I intend to do as president of the United States.
With that, I’m happy to take a few questions.
QUESTION: (OFF-MIKE) wondering if you could give us some details (OFF-MIKE) stimulus package, how much it’s going to cost, where the money’s going to come from, and when do you want to see it enacted?
OBAMA: I want to see it enacted right away. It is going to be of a size and scope that is necessary to get this economy back on track.
I don’t want to get into numbers right now. Part of the task of this economic team behind me is to help to shape the details of that plan, in consultation with Congress, the Federal Reserve, and businesses, and — and thinkers across the country.
But I think the most important thing to recognize is that we have a consensus, which is pretty rare, between conservative economists and liberal economists, that we need a big stimulus package that will jolt the economy back into shape and that is focused on the 2.5 million jobs that I intend to create during the first part of my administration. We have to put people back to work.
Now, that runs in parallel with making sure that our financial system is stable. And so we’re going to have to do more than one thing at a time.
But across the board, people believe that this stimulus is critical.
OBAMA: And the first job of my economic team is to shape that economic stimulus package so that it is delivering on the 2.5 million jobs that we talked about and is also providing a down payment on the long-term strategies we need in terms of making this economy work for all Americans.
That means we have to invest in clean energy. We’re going to have to invest in the systems in our — in health care that can reduce costs for families and for businesses.
It means that we’re going to have to invest in the education system to ensure that we’re competitive over the 21st century.
So not only do I want this stimulus package to deal with the immediate crisis, I want it also to lay the groundwork for long-term, sustained economic growth.
QUESTION: (OFF-MIKE) question is about taxes. Will you let the Bush tax cuts expire at the end of 2010 or will you use legislation to repeal them before that?
OBAMA: Well — well, I said during the campaign that my plan represented a net tax cut. And that’s important to remember: 95 percent of workers in this country would receive a net tax cut under my plan.
Now, the reason that’s important is not only is that good for families who are struggling, but it’s also part and parcel of what we need when it comes to stimulus.
We’re going to be putting money into people’s pockets so that they can spend on buying a new computer for their kid’s school, so that they can, you know, make sure that they are able to deal with heat and groceries and all the other strains on family budgets.
Now, what I’ve also said during the course of this campaign is we’ve got to restore some balance to our tax code. And the Bush tax cuts were disproportionately targeted towards the very wealthiest Americans. Those who are making more than $250,000 a year can afford to pay a little bit more.
And it is important, if we’re going to help pay for some of these expenditures that are absolutely necessary to get our economy back on track, that those who are in a position to pay a little bit more do so. Whether that’s done through repeal or whether that’s done because the Bush tax cuts are not renewed is something that my economic team will be providing me a recommendation on.
But the basic principle is that we’re going to provide tax cuts to the vast majority of Americans, the middle class that have been struggling over the last eight years, that those who’ve benefited disproportionately over the last eight years, the very wealthiest among us, will pay a little bit more in order for us to be able to invest in the economy and get it back on track.
QUESTION: Mr. President-elect, I’d like to ask a follow-up on the size of the stimulus package. Senator Schumer said yesterday up to $700 billion was needed. Today, investor Barton Biggs said as much as $1 trillion. Could you give taxpayers a range of — of the figure that you’re thinking of?
OBAMA: I’m not going to discuss numbers right now, because I think it’s important for my economic team to come back with a recommendation.
But what I want to emphasize is that there is a consensus among across the political spectrum that we need a stimulus, and we have to make sure that the stimulus is significant enough that it really gives a jolt to the economy, that it is putting people back to work, that it is making investments, that it is restoring some confidence in the business community that, in fact, their products and services are going to have customers.
And so we are going to do what’s required to jolt this — this economy back — back into shape.
Now, it’s going to be costly. And one of the things that we know already is that, even if we did nothing further for the remainder of this year, that we’re going to see a substantial deficit next year, bigger than we’ve seen in a very long time.
And so I think American taxpayers are understandably concerned, if we already have a big deficit, and now we’re added an additional stimulus, how are we going to pay for all that?
The right answer is that we have to first focus on getting the economy back on track. We’ve got to first focus on making sure that we’re creating those 2.5 million jobs. We’ve got to make sure that the investments are made to sustain economic growth over the long term.
OBAMA: And then what we also have to do as part of this package — and this is going to be one of the major charges to my economic team — is that we reform how business is done in Washington and how the budgeting process works, how projects are done, so that we have a path towards a sustainable and responsible budget scenario down — down the line.
So the way to think about it is short term, we’ve got to focus on boosting the economy and creating 2.5 million jobs, but part and parcel of that is a plan for a sustainable fiscal situation long term, and that’s going to require some reforms in Washington. And I’m going to be discussing that more tomorrow.
QUESTION: Thank you, Mr. President-elect (OFF-MIKE) has been criticized in some quarters for taking an ad hoc approach to financial rescues. Can you describe how your new team’s approach might differ from the approach that we’ve had for the last year?
OBAMA: Well, I don’t want to look backwards. I think that — as I said, we’ve had an unprecedented crisis.
I mentioned in my 60 Minutes interview that I’m sure there are some things that didn’t work exactly the way Secretary Paulson intended. He’d be the first to admit that. Some things have obviously helped in terms of stabilizing the financial system.
But what I want to make sure is that, moving forward, we are clearly articulating for the American people and the business community what our end goals are. Where are we going? What are we trying to achieve? And that there’s clarity and transparency to our plan.
That doesn’t mean that there aren’t going to be adjustments over the course of weeks or months to respond to changing situations, but I think part of what we’ve seen is, is confusion on the part of the markets sometimes in terms of what the overall direction might be. And we want to make sure that we’re providing as much clarity as possible.
The other point I would make is that, even as we are doing whatever’s required to stabilize the financial system — and I think that’s a commitment that exists currently in the administration and is going to be a top priority for me during the transition, as well as once I take — once I’m sworn in as president.
Even as we focus on making sure that the financial system is stable, that we also recognize that a strong Main Street will reinforce and help a strong Wall Street and that we can’t separate those two things.
And a working principle for me is going to be, are we looking at, for example, home foreclosures in a systematic way and addressing some of the struggles that are taking place outside of Wall Street, not only because it’s good for working families, but also because it’ll help stabilize the financial system?
QUESTION: Thank you, Mr. President-elect. I was wondering if you saw the auto hearings last week. I wonder if you think the automakers made a convincing case for some kind of rescue package from Washington. And how do you want to see Congress proceed on that issue?
OBAMA: The auto industry historically has been the backbone of America’s manufacturing base. And it’s not just the auto industry. It’s not just the big three. It’s also all the suppliers, all the businesses that in one way or another are part of our auto industry that are at stake here.
So I’ve said before — and I will repeat — we can’t allow the auto industry simply to — to vanish. We’ve got to make sure that it is there and that the workers, and suppliers, and businesses that rely on the auto industry stay in business.
What I also have said is that we can’t just write a blank check to the auto industry. Taxpayers can’t be expected to pony up more money for an auto industry that has been resistant to change.
And I was surprised that they did not have a better-thought-out proposal when they arrived in Congress. I think Congress did the right thing, which is to say, You guys need to come up with a plan and come back before you’re getting any taxpayer money.
OBAMA: And my attitude is that we should help the auto industry, but what we should expect is that any additional money that we put into the auto industry, any help that we provide is designed to assure a long-term sustainable auto industry and not just kicking the can down the road.
OBAMA: Well, the — I think that the auto industry needs to present us with some clarity in terms of the dollar figures that they’re talking about, but more importantly, are they describing for us an auto industry that is focused on retooling, understands that we’re entering into a new energy economy, that is going to be competitive globally?
That’s the kind of plan that the American people I think want to see. Nobody wants to see more job loss. And I think Americans take great pride in the history of the American automobile industry.
But taxpayers don’t want to see more money wasted, so we need to see a plan. And when we see a plan, we’re going to, I think, be able to shape the kind of assistance package that makes sense.
All right, I’m going to take one more question.
QUESTION: (OFF-MIKE) Mr. President-elect, how should the (OFF- MIKE) having talks with Secretary Paulson and other members of the administration on that?
OBAMA: Well, I spoke with President Bush today. I spoke with Chairman Bernanke today. And let me repeat: We have to do whatever is required to keep the financial system working and capital flowing.
That’s not important just for the banks. It’s important for our entire economy. It’s important for small businesses and large businesses alike. It’s important for their employees. It’s important for retail sales.
So my commitment is to do what’s required so that our financial system works and credit flows. President Bush has indicated that he has the same approach, the same attitude.
A lot of authority has already been provided to the administration, to Secretary Paulson. Chairman Bernanke has authority, as well. And we need to make sure that that authority is used forcefully in the coming weeks to stabilize the current situation.
I will make further assessments about whether it’s necessary to draw down additional TARP money, as the administration and Treasury Secretary Paulson and Bernanke provide me more real-time information.
But I think what’s most important for the American people to understand is that we are united in making sure that the financial system works and operates the way it needs to.
OK. All right, thank you, guys. Appreciate it.